APA’s 1Q 2026 earnings call highlighted improving Permian drilling economics, ongoing gas takeaway constraints in West Texas, and a growing emphasis on gas-linked opportunities both in the U.S. and internationally. Management repeatedly stressed that operational efficiency gains — rather than higher activity levels — are driving production resilience and free cash flow growth.
In the Permian, APA said it is sustaining and slightly increasing oil production with fewer rigs and lower capital intensity, reflecting continued gains in drilling and completion efficiency. The company raised its 2026 U.S. oil production outlook to 122 Mb/d and noted that its Permian portfolio now consists entirely of unconventional assets with more than a decade of economic inventory. APA also indicated that producers are targeting deeper zones with a higher gas-oil-ratio (GOR), which is increasing associated gas production and creating additional exposure to gas market dynamics.
A major theme was ongoing Waha gas pricing weakness and associated takeaway constraints. APA curtailed some Permian gas volumes during 1H 2026 because of weak Waha pricing but expects curtailments to ease in the second half as new pipeline capacity enters service. Management specifically cited the GCX expansion, Blackcomb Pipeline, and Hugh Brinson projects as new egress capacity expected to narrow Waha basis differentials later this year.
APA also emphasized the growing strategic value of gas marketing and LNG exposure. Its trading portfolio is benefiting from wide Waha basis differentials and elevated LNG prices, with management projecting substantial cash flow contributions into 2027 even as basis spreads tighten. The left side of the slide below shows the potential impact of wide gas spreads between HSC and international pricing while the right side shows the magnitude of the 2026 estimated cash flow contributions from gas trading: $1.1 billion after netting off hedging losses (right-most stacked blue column).
